Correlation Between BRAEMAR HOTELS and ArcelorMittal

Can any of the company-specific risk be diversified away by investing in both BRAEMAR HOTELS and ArcelorMittal at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BRAEMAR HOTELS and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BRAEMAR HOTELS RES and ArcelorMittal, you can compare the effects of market volatilities on BRAEMAR HOTELS and ArcelorMittal and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BRAEMAR HOTELS with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRAEMAR HOTELS and ArcelorMittal.

Diversification Opportunities for BRAEMAR HOTELS and ArcelorMittal

-0.11

Correlation Coefficient

BRAEMAR HOTELS  ArcelorMittal

Good diversification

The 3 months correlation between BRAEMAR and ArcelorMittal is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BRAEMAR HOTELS RES and ArcelorMittal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal and BRAEMAR HOTELS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BRAEMAR HOTELS RES are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal has no effect on the direction of BRAEMAR HOTELS i.e., BRAEMAR HOTELS and ArcelorMittal go up and down completely randomly.

Pair Corralation between BRAEMAR HOTELS and ArcelorMittal

Assuming the 90 days horizon BRAEMAR HOTELS RES is expected to under-perform the ArcelorMittal. But the stock apears to be less risky and, when comparing its historical volatility, BRAEMAR HOTELS RES is 1.01 times less risky than ArcelorMittal. The stock trades about -0.06 of its potential returns per unit of risk. The ArcelorMittal is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,220  in ArcelorMittal on December 25, 2024 and sell it today you would earn a total of  680.00  from holding ArcelorMittal or generate 30.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BRAEMAR HOTELS RES  vs.  ArcelorMittal

BRAEMAR HOTELS RES

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRAEMAR HOTELS RES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ArcelorMittal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ArcelorMittal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRAEMAR HOTELS and ArcelorMittal

The main advantage of trading using opposite BRAEMAR HOTELS and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRAEMAR HOTELS position performs unexpectedly, ArcelorMittal can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.

The idea behind BRAEMAR HOTELS RES and ArcelorMittal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.